The Nikkei share average notched up its biggest daily gain in two weeks on Thursday as investors took a rally in US stocks as a signal to buy, shrugging off the yen's rise to its highest level in nearly five years. The Nikkei jumped 1.75 percent after bargain hunters saw a 200-point tumble in the previous two sessions following weak Japanese industrial output data as an opportunity to snap up battered exporters such as Canon Inc.
Shares in the camera and copier maker rose 2.36 percent to 5,200 yen, snapping back from a 1.6 percent drop on Wednesday.
"We've seen a bit of bargain-hunting today in exporters like Nissan and Canon after the big overnight rise in US stocks," said Ken Masuda, senior dealer at Shinko Securities.
The Nikkei rose 188.82 points to 10,973.07, its biggest daily gain since November 15. The broader TOPIX index gained 1.66 percent to 1,105.38.
On Wednesday, data showing strength in the US manufacturing sector and personal spending helped push the Standard & Poor's 500 Index to its highest close in nearly 3-1/2 years.
The biggest one-day fall in oil prices in three years in New York also benefited US manufacturers, which are sensitive to high energy costs, as are those in Japan.
Crude oil futures were around $45.56 a barrel in Asia on Thursday after falling over $3.00 in New York.
Nissan Motor Co, Japan's second biggest auto maker, climbed 2.13 percent to 1,101 yen, its highest close in two weeks, despite a steel shortage and the strong yen, which threatens to reduce the value of its overseas profits.
The dollar fell as low as 101.86 yen after the close of Tokyo share trade, breaching a key psychological support level at 102 yen and hitting its lowest since January 2000.
The Nikkei average has fallen 2.4 percent over the last six months, under-performing a 13.4 percent rise in the S&P 500 over the same period, partly due to worries that a stronger yen would hurt economic growth, already under threat from high oil prices.
Sony Corp, which gets around 30 percent of its sales from North America, gained 1.08 percent to 3,730 yen.
Matsushita Electric Industrial Co, the maker of Panasonic goods, rose 1.53 percent to 1,531 yen.
Elsewhere, Yamanouchi Pharmaceutical Co rose 1.61 percent to 3,790 yen after the drug maker moved closer to US approval for its treatment for hyponatremia, Conivaptan, as US regulators gave it an "approvable letter".
Stock market volume edged up, with 1.259 billion shares changing hands, the highest total since November 18.
Gainers overwhelmed decliners 1,293 to 187.
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